Perceptric Forum

A Wild Prediction

Chris Gilbey — Thu, 06 Nov 2008 19:44:41 +1100

I wouldn't be surprised if somewhere soon after January 21st Obama announces something like this:

1. The American Green Energy Challenge - as big as the idea of putting a man on the moon - Within four years America needs to have developed a renewable electricity technology that will be able to supply 75% of America's current needs within 10 years. Key to this will be that it must also solve the potential problem of utilising the existing retail infrastructure for recharging so as to enable gas station owners and energy companies to remain in business. The investment will be 100 Billion plus.
2. The US car industry will be part nationalised, if not in name then by deed. Chrysler, Ford, GM will all be owned 75% by the government through a series of bonds that are issued the purpose of which will be to develop American electrical technology that will be utilized in all US cars and will be exportable to the world. Price of the investment in the auto industry $200 Billion.
3. The government will write mortgages of up to $350k for any household is earning less than $200k. Keep the workers happy!

I reckon that there will be a total green energy policy that will involve universities, businesses, the energy industry and they will all be on board.... He has until Jan 21st to put it all together. And I reckon that his team will have been on this for 90-180 days already. This is about making the first 100 days absolutely full of big spending, big employment stuff!

Update:

Obama and Biden have already announced the following at the Change.gov blog:

Invest in the Manufacturing Sector and Create 5 Million New Green Jobs

Invest in our Next Generation Innovators and Job Creators: Obama and Biden will create an Advanced Manufacturing Fund to identify and invest in the most compelling advanced manufacturing strategies. The Fund will have a peer-review selection and award process based on the Michigan 21st Century Jobs Fund, a state-level initiative that has awarded over $125 million to Michigan businesses with the most innovative proposals to create new products and new jobs in the state.
Double Funding for the Manufacturing Extension Partnership: The Manufacturing Extension Partnership (MEP) works with manufacturers across the country to improve efficiency, implement new technology and strengthen company growth. This highly-successful program has engaged in more than 350,000 projects across the country and in 2006 alone, helped create and protect over 50,000 jobs. But despite this success, funding for MEP has been slashed by the Bush administration. Barack Obama and Joe Biden will double funding for the MEP so its training centers can continue to bolster the competitiveness of U.S. manufacturers.
Invest In A Clean Energy Economy And Create 5 Million New Green Jobs: Obama and Biden will invest $150 billion over 10 years to advance the next generation of biofuels and fuel infrastructure, accelerate the commercialization of plug-in hybrids, promote development of commercial scale renewable energy, invest in low emissions coal plants, and begin transition to a new digital electricity grid. The plan will also invest in America's highly-skilled manufacturing workforce and manufacturing centers to ensure that American workers have the skills and tools they need to pioneer the first wave of green technologies that will be in high demand throughout the world.
Create New Job Training Programs for Clean Technologies: The Obama-Biden plan will increase funding for federal workforce training programs and direct these programs to incorporate green technologies training, such as advanced manufacturing and weatherization training, into their efforts to help Americans find and retain stable, high-paying jobs. Obama and Biden will also create an energy-focused youth jobs program to invest in disconnected and disadvantaged youth.
Boost the Renewable Energy Sector and Create New Jobs: The Obama-Biden plan will create new federal policies, and expand existing ones, that have been proven to create new American jobs. Obama and Biden will create a federal Renewable Portfolio Standard (RPS) that will require 25 percent of American electricity be derived from renewable sources by 2025, which has the potential to create hundreds of thousands of new jobs on its own. Obama and Biden will also extend the Production Tax Credit, a credit used successfully by American farmers and investors to increase renewable energy production and create new local jobs.

Update Nov 9th

It may already be too late for GM. According to Bloomberg the company is fast running out of operating cash.

From The Sydney Morning Herald Dec 28th 2000

Chris Gilbey — Mon, 03 Nov 2008 11:00:52 +1100

My wife just came across an old newspaper cutting - an article from The Sydney Morning Herald, with some future predictions from technology entrepreneurs... I was among them.

This is what the article attributes to me (interesting from 8 years into the future to see what punditry I was up to then!):

Chris Gilbey, a 20 year veteran of the music industry and author of the book, The Infinite Digital Jukebox, launched Big Fat Radio in June. Despite a star line up of former ABC DJ's, investors pulled the plug five months later. Gilbey says he is now a business development consultant.

"We found that when the investment market turns it can do 180 degrees a lot quicker than most CEO's can change their business models. The only killer app is email. B2C needs a bricks and clicks partnership. Internet entertainment needs wide broadband access; and good intellectual property in the form of patents holds true value. Venture capitalists will ask for and get a lot more equity for their buck. Cybersecurity will become a bigger issue. Government support for innovation will be accellerated. Online companies that have cash will find that they need to deliver profits now, regardless of what time frame the original business plan provided and will find the only miracle cure will be to buy existing businesses with strong revenues and numbers in the black. A bunch of smart young guys will probably go and live in the US where there is a lot more optimism and cash. Those companies that can weather the storm will do incredibly well. Streaming will be big."

Macro Trends

Chris Gilbey — Sun, 19 Oct 2008 06:00:42 +1000

Some people who are regular visitors to the Perceptric blog have asked me if I am depressed by the news that I tend to report on from time to time. My view is that we are fortunate to be able to have the ability to access multiple viewpoints on the news of the day, so that we can make rational decisions about how to deal with the events that are taking place.

One thing that I discovered many years ago, when I was quite young, was that I had an uncanny knack for being able to spot new and emergent trends. I saw the emergence of music trends and fashion trends back then. That's partly why I got into the music business. It was comparatively easy, to be honest. Once you see the pendulum of public taste starting to peak for a fashion or music macro trend - like, say, synthesizer pop - the next big trend is likely to be guitar bands. However, when the trend pendulum moves rapidly it never goes back to quite where it has been before....

The thing that I am watching right now in terms of macro trending is the maxing out of consumerism. I believe that there will be (needfully, perhaps) a massive trend toward satisfaction with small non-consumerist things.

An early sign of this may be the move toward Slow Food.

I believe that we are going to see a further incredibly big movement over the next 2-4 years. This is going to be partly as a result of the breach of trust that started with banks and continues with the milk scares from China.

I see it as a realization of the problems of supply chain integrity.

Modern supply chains are only possible, just like the derivatives market, as a result of digital technology. Modern supply chains are utterly and totally illogical too. For instance: the vegetables that you purchase at the local supermarket in Nowra may well have grown nearby. However they are trucked up to Sydney to market, where they are purchased centrally and warehoused to be shipped back to the local Woolies and put on the shelf. It is easier to manage the inventory for Woolies by doing this, but it is totally illogical from a health and welfare point of view.

When we used to own a deer farm in Mudgee, I experienced this personally. In order to sell venison through the local butcher we first had to send deer to Muswellbrook to the abbatoir there (the local abbatoir in Mudgee didn't have the facilities to slaughter deer and didn't want to spend the money to modify the chain). Then the meat had to be shipped to Sydney and then finally onshipped back to the butcher in Mudgee. The net result of this is what all this transportation does to price - notwithstanding the issue of the green house gas that is released with all that transportation.

What it does to price is that it means that margin has to be added for all the shipping providers in that ecosystem. And at the end of the process the butcher will set a price that is viable for the marketplace. Which means that his price point drives back down the chain to the originator, the farmer, and sets the price for the deer on the hoof. All that means a non-viable business.

So think about it: This digital economy enables all these productivity gains that have been talked about for years. But in effect what it does is that it means that the margins are tightened so much that the farmer goes out of business. So it helps build an unsustainable ecosystem which ultimately collapses.

I believe that now that trust between banks is broken, next to go will be trust between customers and banks. Then will come trust between customers and supermarkets and onwards through the system.

That in turn will lead to a gradual move by thinking people to migrate away from the cities and suburbs to sustainable, rural communities. In those communities people, especially those with small children, will demand that they are able to buy products that are locally sourced, that can be trusted. This migration away from the city, of course, flies totally in the face of recent trends of people to leave the bush and go to the city.

Watch for it to happen. The revenge of the smart against globalized food chains.

Dedicated To My Friends In America

Chris Gilbey — Sat, 18 Oct 2008 16:39:23 +1000

A tip of the hat to my buddy, Scott Brisbin, for turning me on to this instant classic! Great to see real talent...

More Economic Punditry

Chris Gilbey — Wed, 15 Oct 2008 04:50:21 +1000

Have you noticed how the media feeds and then moves on?

Now the economy has pushed just about everything off the front pages - the US election, climate change, the war in Iraq and Afghanistan, Chinese chemical pollution of baby's milk...

Over the last couple of days I have read a couple of things that are worthy of sharing and thinking about:

Here is one about the derivatives market: This suggests that the next big ticking time bomb is soon to hit and it is valued at over $500 Trillion! Yes you read that right.

Data on the five-fold growth of derivatives to $516 trillion in five years comes from the most recent survey by the Bank of International Settlements, the world's clearinghouse for central banks in Basel, Switzerland. The BIS is like the cashier's window at a racetrack or casino, where you'd place a bet or cash in chips, except on a massive scale: BIS is where the U.S. settles trade imbalances with Saudi Arabia for all that oil we guzzle and gives China IOUs for the tainted drugs and lead-based toys we buy.

This is not just an American problem. In Australia however much we like to think that we are decoupled from the rest of the world (when it suits us) and America in particular at the moment, we are going to get our share of the fall out from this.

Its kind of like watching an accident on a freeway. The first accident happens and as people apply their brakes some lose control. The faster everyone was going, the more cars end up in the pile up before traffic generally slows down to a speed manageable for the new conditions. We are still at the first accident stage of this pile up, I am afraid.

However, having said that, I was really gratified to read an interview with George Soros that made incredible sense and was truly visionary. (Why is it that we can't get this kind of clear thinking from elected politicians?)

Here is an excerpt:

Soros: But then, I'm afraid, there is the fallout in the real economy, which is now gathering momentum. At this point, repairing the financial system will not stop a severe worldwide recession. Since, under this circumstance the U.S. consumer can no longer serve as the motor of the world economy, the U.S. government must stimulate demand. Because we face the menacing challenges of global warming and energy dependence, the next administration should direct any stimulus plan toward energy savings, developing alternative energy sources and building green infrastructure. This stimulus can be the new motor for the world economy.

Gardels: At the end of the day, won't we be looking at a vastly different global financial landscape? The U.S. will decline as the top power. It will have, along with parts of Europe, socialized banks and loads of debt. Communist China will be the new financial power globally, flush with capital and a major investor in the West.

Soros: U.S. influence will wane. It has already declined. For the past 25 years, we have been running a constant current account deficit. The Chinese and the oil-producing countries have been running a surplus. We have consumed more than we produced. While we have run up debt, they have acquired wealth with their savings. Increasingly, the Chinese will own a lot more of the world because they will be converting their dollar reserves and U.S. government bonds into real assets.

Light At The End Of The Tunnel

Chris Gilbey — Tue, 14 Oct 2008 12:08:58 +1000

I have been quietly watching for some years as the gold bugs have been pitching the importance of investing in bullion. I was always more taken with the idea of investing in shares in gold mines and getting the benefit of the market's anticipation of value rather than tying money up in an asset that just sits there.

However, as I read stories like this one about the potential for the house to keep on crumbling and for the bond market to be hit next, I am starting to think that gold's time may be fast approaching!

The US - No Longer The Leader Of World Economic Thought

Chris Gilbey — Tue, 14 Oct 2008 12:04:05 +1000

Its really a no-brainer, isn't it? The US has lost its ability to inspire the world with visionary leadership and thought.

Anatole Kaletski, writing in the Times had this to say:

Since the creation of the Bretton Woods monetary system in 1944 every global financial initiative of any significance has been devised, led and co-ordinated by the US Government. This US leadership did not mean that America always got its way in financial affairs — nor that US co-ordination always succeeded, as exemplified by the breakdown of Bretton Woods in 1971. But it did mean that international financial initiatives were never attempted until ideas and the leadership came from Washington. The sole exception to this rule in the past 30 years was the creation of the euro; but this was viewed in Washington as an intra-European affair with limited global consequences.

The present global banking crisis has been a very different matter, since it originates in the US itself. Even a few weeks ago a solution without US leadership would have been inconceivable. In the past few days, however, the failure of the Bush Administration to follow through in any concrete way on the $700 billion “Paulson package” that it rammed so painfully through the Congress, has focused attention on Washington’s vacuum of leadership and ideas. Aghast at the dithering incompetence of the US in handling this crisis, European politicians have realised that Henry Paulson, the supposedly brilliant US Treasury Secretary, was an emperor with no clothes. Instead of waiting for US leadership, they had to take responsibility for Europe’s problems. In trying to do this, they have found an unlikely intellectual guide and champion: the British Treasury and Gordon Brown.

I can only imagine what would have happened in Australia if John Howard were still PM. He was so slavish about following Bush that Australia would have been in worse trouble than it is right now - and sinking fast. Our current PM, Kevin Rudd, at least seems to be taking a position of leadership rather than followship. Whether Wayne Swan has the intellectual bandwidth for the task is another question.

Inside The Crash

Chris Gilbey — Tue, 14 Oct 2008 11:50:45 +1000

Eliot Spitzer is the Governor of New York. A few years ago he was the Attorney General of the state. In today's Washington Post he reveals the active role that the Bush administration had in stopping him, as AG, from going after predatory lenders who Spitzer believed were breaking the law.

When you think about it, you have to wonder why Americans aren't calling for the impeachment of Bush, even if he does only have a couple of months to run as President.

Here is some of what Spitzer wrote...

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

Update on Rebuilding Trust Article Below

Chris Gilbey — Thu, 09 Oct 2008 16:13:50 +1000

There is an article by Paul Craig Roberts here.

In it he discusses the true level of inflation etc in the US:

Here it is:

"According to statistician John Williams, who measures inflation, unemployment, and GDP according to the methodology used prior to the Clinton regime's corruption of these measures, the US unemployment rate is currently at 14.7% and the inflation rate is 13.2 percent. Consequently, real US GDP growth in the 21st century has been negative."

James Howard Kunstler's View (courtesy www.321gold.com)

Chris Gilbey — Wed, 08 Oct 2008 10:45:12 +1000

All Fall Down

James Howard Kunstler
Author of The Long Emergency
Oct 7, 2008

God knows what manner of deals went down this past weekend in the Hamptons wine cellars and below-decks among the Chesapeake Bay sailboat fleet. All these hidey-holes must have been dank and fetid with the sweat of mortal fear. Will the US Government declare itself a subsidiary of General Electric? Will Vlad Putin be roped in to save Goldman Sachs? Meanwhile, the whole noisome rat maze of international counter-party deals was taking on sewer water and rodents of every nationality were seen leaping for daylight all over the fusty old motherlands of Europe. A cascading collapse of international finance is underway. While many fixers may jump heroically into the tumbling wreckage hoping to rescue this-and-that, the outcome by Friday is liable to be an unrecognizable smoldering landscape of the G-7's hopes and dreams.

Some big questions for the week: will the Euro survive as a currency? Will the rush into the US dollar continue even as the US financial system dematerializes in a Fibonacci fever of accelerating de-leveraged infinitude? Will the remaining Big Boyz, Goldman Sachs and JP Morgan succumb to the counter-party hemorrhagic fever? Will great rows of lesser banking dominoes now start clacking onto their faces? Will all fifty states follow the leads of California and Massachusetts and line up at the US Treasury's hand-out window. Will the entity that calls itself the civilized world be left at week's end with anything resembling money?

Your guess is as good as mine. We've entered the realm of phase change, where everything is slipping and nothing has settled. The final result, when the dust settles -- and that may not be for weeks to come -- will certainly be a poorer western world. Will it be so poor that it can no longer afford to import anything? Including oil from the land of the date palm? If so, we are really in for a rough ride, poised as we are at the edge of the heating season here in the temperate regions. Notice, by the way, that the $700 billion just approved by congress to bail out Wall Street is exactly the same sum of money that we send to the oil exporting nations this year.

Will millions stop receiving paychecks due to the turmoil in banking? It's certainly possible, starting with the poor drones in Mr. Schwarzenegger's motor vehicle bureau and eventually ranging to every payroll office in the land. Will Sarah Palin's fellow Six-packers line up around the parking lagoons of the suburban banks trying desperately to withdraw the last seventy bucks in their checking accounts? (And will their thoughts in the event be: this economy is fundamentally sound....) Will the supermarket shelves of chipoltle-flavored crunchy snacks and power drinks go empty as truckers refuse to deliver their loads without up-front payment? And how long does it take a hungry public to turn mean?

We could see a parallel problem in the motor fuel supply sector. So far, gasoline shortages have only appeared in parts of the Southeast USA, due to interruptions caused by two hurricanes. If the oil tankers quit offloading now for lack of credible payment, then the whole nation will get an interesting lesson in the shortcomings of the suburban development pattern.

The candidates' debate Tuesday night should be interesting. I don't expect too much give-and-take on the subject of East Ossetia this time around.

Even at this point, the current crack-up in world finance makes the 1929 crash and the events of the 1930s look in comparison like an orderly small town auction of somebody's grandmother's effects. Back in that sepia day, America had plenty of everything except ready cash. We had, especially, plenty of our own oil, and -- you're not going to believe this but it's true -- the stuff was selling for as little as ten cents a barrel, it was so abundant. And yet still, America in the 1930s plunged into a dark depression of inactivity, loss of confidence, and impoverishment.

This time around, things could get more disorderly. Personally, I think we may be beyond the reach even of fascist authoritarianism, because unlike the programmed industrial masses of the 1930s, we are unused to regimentation, to lining up at the factory gates and the movie theaters. Back then, society was so regimented that everybody wore uniforms in-and-out of the military. Look at movies from the 1930s. Every man-jack wore either a necktie and hat or overalls. The industrial masses behaved like termites. Once unemployment hit, they were waiting to be told what to do, to line up for something. It worked fabulously for Hitler, who took every advantage of this mentality. Luckily, the US went for Roosevelt (both FDR and Hitler entered office the same winter of 1933, by the way). FDR was more like everybody's kindly Uncle Frank, and his reassuring persona enabled Americans to suck up their bad luck and altered circumstances. Many of them retreated to the family farm (which still existed then) and waited things out -- and, anyway, the melodrama of the Great Depression soon resolved in the Second World War when Hitler's love of regimentation led him into military misadventure. He shouldn't have picked a fight with someone who had so much petroleum -- end-of-story.

Okay, what happens here and now? To this point (9:am Monday October 6, 2008) events have been proceeding under a veneer of still-just-barely-credible authority. We (as represented by congress) have allowed Mr. Paulson to advance and activate his remedies. As things unspool further, he will be out of credibility, perhaps in a few days, and it's unlikely that his successor will have any either. Mr. Bernanke has simply gone AWOL. Notice, he has vanished from the media landscape. We may soon be hearing the declaration of various "emergency" measures involving the allocation of food and the rationing of oil products. The Big Bailout of last week may be partially rescinded as it becomes obvious that it has had no effect -- I believe about half the $700 has already been allocated, which is to say: lost. I realize these things sound pretty extreme. But forces have been set in motion and momentum rules. One thing for sure: the American public is about to undergo a severe mood adjustment. There will be fewer American Idol fans and worshippers of Donald Trump by the close of business on Friday.

Oct 6, 2008
James Howard Kunstler
email: kunstler@aol.com
website: www.kunstler.com

Jim Kunstler is the author of The Long Emergency, The Geography of Nowhere and many other books.

He lives in upstate New York.

His new novel of the post-oil future, World Made By Hand, is available at all booksellers.